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Growth outlook in Nigeria, other commodity exporters sluggish


The headquarters of the International Monetary Fund in Washington, DC. (Photo by Brendan SMIALOWSKI / AFP)

• Monetary policy not ‘end game’, IMF warns economies
The International Monetary Fund (IMF), in its October World Economic Outlook, yesterday, said the performance outlook for commodity exporters like Nigeria still remains lacklustre. Contrastingly, significant growth is expected for non-commodity exporters, such as Vietnam and Bangladesh, while the low-income developing countries would remain robust, though not evenly spread.
IMF officials on economic assessment visit to the country, had recently warned about the implications of sustained fiscal crisis, notably in failed revenue projections, as well as the country’s dependence on crude oil earnings.
The outlook under current policies was adjudged challenging, as growth expected at 2.3 per cent this year, is riding on the strength of a continuing recovery in the oil sector and momentum in agriculture, which are largely uncertain.
But restating the global impact of the ongoing trade barriers and heightened geopolitical tensions, including Brexit-related risks, the new report said there could be further disruptions in the offing for the likes of Nigeria.
Global growth in 2020 is projected to improve modestly to 3.4 per cent, a downward revision of 0.2 per cent from April projections, a development that is more likely affect emerging economies.“Such tensions, as well as other domestic policy uncertainties, could negatively affect the projected growth pickup in emerging market economies and the euro area,” IMF’s Economic Counsellor, Gita Gopinath, said.
Meanwhile, the report warned global economies not to put all their bets in monetary policy, as there is a significant risk of financial vulnerabilities with persisted low interest rate regime, which now makes effective macro-prudential regulation imperative.“Monetary policy cannot be the only game in town and should be coupled with fiscal support where fiscal space is available and where policy is not already too expansionary.
“In its absence, and to fend off other risks to growth and raise potential output, economic activity should be supported in a more balanced manner,” Gopinath said.He said that undoing the trade barriers put in place with durable agreements and reining in geopolitical tensions must top the list of solutions.
“Such actions can significantly boost confidence, rejuvenate investment, halt the slide in trade and manufacturing, and raise world growth.“While monetary easing has supported growth, it is important to ensure that financial risks do not build up.“Countries should simultaneously undertake structural reforms to raise productivity, resilience, and equity. Reforms that raise human capital and improve labour and product market flexibility can help.
“At three per cent growth, there is no room for policy mistakes and an urgent need for policymakers to cooperatively deescalate trade and geopolitical tensions,” he added.

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